Did Uncle Sam Intentionally Mislead the American Public?
Posted by Larry Doyle on October 5, 2009 12:40 PM |
“You can’t handle the truth!!”
While the above line by Jack Nicholson in A Few Good Men may have made for good theatre, it makes for lousy public policy. Regrettably, Uncle Sam has utilized that approach in its initial disbursement of funds via the TARP (Troubled Asset Recovery Program). That opinion is not strictly mine (although I do agree with it), but rather that of Neil Barofsky, the inspector general charged with overseeing the bank bailouts.
The New York Times sheds light on Barofsky’s feelings this morning in writing, Inspector’s Report on Bailouts Says Treasury Misled Public:
The inspector general who oversees the government’s bailout of the banking system is criticizing the Treasury Department for some misleading public statements last fall and raising the possibility that it had unfairly disbursed money to the biggest banks.
A Treasury official made incorrect statements about the health of the nation’s biggest banks even as the government was doling out billions of dollars in aid, according to a report on the Troubled Asset Relief Program to be released on Monday by the special inspector general, Neil M. Barofsky.
There is NO doubt that Uncle Sam, in the persons of Hank Paulson, Ben Bernanke, Tim Geithner, Larry Summers et al, has little confidence that the American public can handle the truth about the overall health of our banking industry.
That said, the lack of transparency and integrity as highlighted by Mr. Barofsky does not come without a cost. What is that cost? Lessened confidence in our regulators and our markets going forward.
I addressed these very topics of financial regulatory transparency and integrity on my radio show last evening. In the process of interviewing former SEC attorney Genevievette Walker-Lightfoot, I made the following comment in regard to the statement put forth a month ago by SEC Inspector General David Kotz dealing with the SEC’s failures on the Madoff investigation. I said:
If that is the kind of face saving self-serving approach, people are going to call foul on it. The real cost is, and I think we are bearing this cost right now whether with the SEC or with FINRA, if you’re not going to be honest with us how can we fully trust that you’ll be honest on a going forward basis?
Now I’ll grant you I guess we don’t have much choice. What are we going to scrap the entire SEC or scrap the entire FINRA and start from scratch? Some people may say that’s what we want to do, but that’s obviously not going to happen.
It does get to the point where there’s got to be total transparency. There’s got to be total integrity. There’s got to be total accountability and if people haven’t done the job or are incapable of doing the job then you know what, for the long haul – and I’m not talking about the next six months but rather the next ten, fifteen, twenty years – people got to go and other people got to come!!
Genevievette Walker-Lightfoot responded:
“I agree. That’s true.”
How about you, what do you think? Can you handle the truth? Wouldn’t you like to be given the opportunity?
Note: the views expressed by Genevievette Walker-Lightfoot during last night’s show are her own personal views and do not in any way reflect her position as an employee of the Federal Reserve Board.